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UK regulator intends to clear BT's takeover of EE

The UK's competition authority has given its provisional backing for BT to complete its planned £12.5 billion takeover of EE.

The Competition and Markets Authority (CMA) said it was its view that the acquisition would be unlikely to lead to a substantial lessening of competition in telecoms markets (15page / 341KB PDF), including the markets for the supply of retail mobile, wholesale mobile, mobile backhaul, wholesale broadband and retail fixed broadband services.

The CMA's final decision is not due until 18 January next year, and stakeholders have until 5pm on 19 November 2015 to comment on the CMA's provisional view.

John Wotton, who chaired the CMA's inquiry into the BT/EE deal, said that despite concerns being raised by other telecoms companies, the inquiry group did not think competition problems would manifest themselves "in practice".

"We provisionally think that the retail mobile market in the UK, with four main mobile providers and a substantial number of smaller operators, is competitive," Wotton said. "As BT is a smaller operator in mobile, it is unlikely that the merger will have a significant effect on competition. By the same token, it is unlikely that the merger will have a significant effect on competition in the retail broadband market, where EE is only a minor player."

"We have also been looking at the ways in which, as a merged company, BT/EE might try to disadvantage competitors which it supplied with services such as backhaul, wholesale mobile or wholesale broadband services. We have provisionally found that in some areas it is unlikely that they would have both the ability and incentive to do so - and in others that the effects of their attempting to do so would be limited. Having considered all the evidence, the group does not provisionally believe that, in a dynamic and evolving sector, it is more likely than not that BT/EE will be able to use its position to damage competition or the interests of consumers," he said.

BT announced in February this year that it had agreed a deal with the current parent companies of EE, Deutsche Telekom and Orange, to acquire the mobile network operator from them. Both Deutsche Telekom and Orange will gain a stake in BT as well as cash as part of the deal to transfer ownership of EE to the UK telecoms giant. Deutsche Telekom will have a 12% stake in BT and Orange a 4% stake post-transaction.

BT chief executive Gavin Patterson said the deal for EE will serve as a boost to its plans for growth in the mobile market.

"The UK’s leading 4G network will now dovetail with the UK’s biggest fibre network, helping to create the leading converged communications provider in the UK," Patterson said. "Consumers and businesses will benefit from new products and services as well as from increased investment and innovation."

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